Baghdad ? The U.S. ambassador said Thursday he still held Blackwater USA bodyguards in “high regard,” even as he labeled the killing of 17 Iraqis by the company’s security contractors a “horrific” incident that prompted him to call for an FBI investigation.

The Iraq government has demanded Blackwater’s expulsion within six months and $8 million compensation for each of the victims from the Sept. 16 shootings.

Ambassador Ryan Crocker lauded the Blackwater guards, mostly hardened veterans who protect him and other American envoys and officials in Baghdad’s dangerous streets.

“Those guys guard my back. And I have to say they do it extremely well. I continue to have high regard for the individuals who work for Blackwater as I do for other security contractors. That said, the incident in September was a horrific one,” he said.

He also noted that he failed to full examine possible problems with Blackwater. Critics have accused the Moyock, N.C.-based company of lax oversight on its heavily armed security teams in Iraq.

“I’m the ambassador here, so I’m responsible. … Yes, I certainly do wish I’d had the foresight to see that there were things out there that could be corrected,” Crocker said in a question-and-answer session with Western reporters.

In Washington, Secretary of State Condoleezza Rice testified at a hearing into U.S. security policies in Iraq, including the role of private contractors.

Rice already has ordered new rules for the private guards who are hired to protect U.S. diplomats, including increased monitoring and clearer rules on the use of deadly force and creation of a board to investigate any future killings.

Crocker declined to speak about Blackwater’s future in Iraq, saying the FBI investigation was not complete. Blackwater’s contract with the State Department expires in May and there are questions whether it will remain as the primary diplomatic bodyguards.

On Sept. 16, four Blackwater gun trucks responding to a distress call from another convoy under the company’s protection blocked west Baghdad’s Nisoor Square. Blackwater has said its convoy came under fire before the guards opened fire in the square, killing 17 Iraqis.

But the Iraqi government investigation of the shooting said Blackwater’s men were unprovoked. No witnesses have been found to contradict that finding. Blackwater, however, has sequestered the men involved and their accounts of what happened remain publicly untold.

Crocker also refused to disclose what he had learned about the shootings, but became introspective at times as he discussed the wider issue of private security contractors. He said the State Department had taken a “a top to bottom look at the entire operation.”